Breakthrough Process Improvement case study submitted by Ducab during 3rd Continual Improvement & Innovation Symposium organized by Dubai Quality Group's Continual Improvement Subgroup to celebrate World Quality Day 2011.

1. Business Process
improvement project
To reduce Business Process
Cycle time for Quotations
To enhance functionality of the quotation system to the
benefit of both Ducab and the customer.
By: Graham Rafferty
Dubai Cable Company
UAE
1

2. Inroduction to Ducab
• Founded in 1979.
• Jointly owned by the Governments of Abu Dhabi and
Dubai
• Leading manufacturer of Electric Cables in the Gulf.
• Sales predominantly in the Gulf region but also exports
to Asia and Europe.
• >800 employees
• 3 manufacturing units in Masafa, Abu Dhabi.
• 4 manufacturing units in Jebel Ali.
• Turnover > 3 Billion AED / year.
• Approx 150,000 t material processed / year.
2

3. DEFINE
3

4. Business Case
• Project commenced in 2010 as part of the Operational
Excellence initiative.
• Due to a decline in demand arising from the global
recession the number of quotations being raised to
secure business had dramatically increased.
• Pressure on the quotation system had resulted in an
increase in the process cycle time.
• Business opportunity was being lost due to failure to
quote in a timely manner.
4

5. Voice of the customer
• Uncertainty in the market place with construction
projects being placed on hold or cancelled.
• Needed very fast response to enquiries for
cable.
• Would give preference to supplier who could
quote within 24 hours.
• Required short lead times for supply of cable.
• Quotations needed to be in a user friendly
format.
5

6. Opportunity
Ducab had available capacity,
manufacturing flexibility and market
presence to respond very quickly to
demand if more business could be
secured.
6

7. Our Goal
• To establish a system where, as far as
possible, required information is available for
converting relevant enquiries to quotation
without referrals to other departments.
• To give a response within 24 hours to enquiries
for standard items and 3 days for new designs
or by tender due date specified.
7

8. Project Scope
• In scope:
– Dubai Cable Business
– Enquiry to Quotation
• Out of Scope:
– Ducab Connect Business.
– Pre-enquiry Sales activities.
– Quotation to order
8

9. Goals
• 70% of enquiries responded to within 24 hours
by end of 2010.
• 90% of enquiries responded to within 24 hours
by June 2011.
9

10. Project Team
Name Role Approved By
Chew Wah Tan Sponsor
Ulhas Menon Process Owner G M Sales
Danish Farouque Project Leader Commercial Manager
Graham Rafferty Facilitator G M Technical
Keith D'Souza Team member G M Technical
Keshev / Manna Facilitator Planning Manager
Ahmed Rashid Ali Commercial Expert Commercial Manager
Hadi Mohammed Design Engineer Technical Manager
Sales Managers Voice of the customer G M Technical
10

11. Project Time line
Phase Start Date End Date Number of Weeks
Define 21/03/2010 08/04/2010 2.6
Measure 09/04/2010 23/04/2010 2.0
Analyse 23/04/2010 30/06/2010 9.7
Improve 01/07/2010 31/08/2010 8.7
Control 01/09/2010 30/09/2010 4.1
11

12. Project management
Quality Companion.
12

13. Measure
13

14. Quotation statistics
• Number quotations raised per month had increased from 244 in 2008 to 582 in 2009.
• Placed great strain on resources in Commercial Department.
Quotation Statistics Jan 2008 to Feb 2010
800
700
Number of quotations
600
500
400
300
200
100
-
Jan- Feb- M ar- Apr- M ay- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- M ar- Apr- M ay- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb-
08 08 08 08 08 08 08 08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10
14

15. Process Mapped
• Very complicated. ENQUIRY TO ORDER
Customer contacts SM for
B
finalising the quotation
A
NO
Co-ordinator prepares NO YES Is the quote NO
Call the customer to send Is it Connect or Rod or Forward to concerned Is the price acceptable Can we offer a price
Get it translated to English regret letter with Baan A acceptable to the
all pages PVC enquiry? department to the customer? discount?
Number & reason code customer?
YES YES
NO NO NO NO
NO
Mode of Enquiry Received Team leader proposes
Customer sends Order to discount based on
YES YES YES Commercial co-ordinator Ducab Minimum NAV/T
By Fax Is it a complete Is the enquiry in Is it in Ducab product Can we manufacture
Is it legible? sorts the enquiries & Is it a cable enquiry? guidelines
By Courier enquiry? English? Range? it?
brings it to Team leader
Tender by Hand
Verbal Enquiry
YES YES
Forward to Technical/ Is it in agreement with NO Discount to be agreed by
Planning GM Sales Policy? GM Sales
YES
Revise the worksheet
Consult SM. Inform YES YES YES NO
Do we know the Do we know of the Should we accept the
customer to use Is it a HV Enquiry? A
customer credentials? project? enquiry?
agreement prices
NO
YES Is the delivery NO
YES NO Planning is consulted for
NO Is T&C acceptable? acceptable to the
revised delivery schedule
customer?
NO YES YES Collect information from
Is it part of framework Team leader reviews SM’s Forward to SM. Do we Do we know the SM/
Is it a Utility business? SDM to review the customer on the
agreement? decision need to Quote? LOB NO
project
YES Does customer send GM Sales/CFO consulted Delivery agreement
the order? for revised T&C as asked communicated to the
NO
YES by customer customer
NO
Is it any other UAE Do we require Bid YES Is bid bond viable in NO
A
market enquiry? Bond? this region Revised proposal
communicated to
customer
YES
NO
NO Is the NAV/T as per YES Worksheet forwarded to
Is it a standard cable?
guidelines? TL for approval/consent
CCO creates a Baan
YES Team leader allocates NO Does the item code Do we require a YES Worksheet data input by YES
Does the customer Create new customer Quotation# with time and Prints the worksheet with Is the price inline with
Is the value >= 2M? enquiry to a CO and gives exist in Baan? (M -> Tender Committee Guidelines? CO based on guidelines in
code exist? code in de database date, Project identifier, CO factor the market trend?
it to CCO B)? meeting? Baan
name
NO NO
Tender committee Team leader decides the
Revised guidelnes
meeting process guidelines to CO
NO
TL sends the quote, Co prepares formal quote alongwith
NO NO YES Is worksheet/quote as worksheet, inquiry, TL approves the quote & Commercial T&C, Tech points & No. YES
SM & 2 GM/MD to sign off Is the quote value Is the quote value < Is T&C as per Ducab Quote sent to TL for Is NAV/T as per plan/
B per agreed tactics/ variation formula, TDS, worksheet and returns to of signatories by value
quote >20M & <40M 20M agreeable terms? approval previous orders?
order with GM Sales compliance, certification to CO Clarifications/delivery/payment terms
CDM etc
YES YES NO
Quote received by CO,
copy of quote sent to SM & GM Sales or other
customer & SM without GM to sign off the quote
CDM & G. Sales to decide
worksheet
on strategy
CO gets confirmation of
Allocated SM signs off the
quote to update Baan for
quote
response date & time
Quote filed in Commercial
file
15

16. ANALYZE
16

17. Key sources of delay identified
1.Work sheet preparation
2.Interface between Commercial and
Technical Departments.
17

18. Worksheet preparation
• Worksheet formed part of the ERP system and was used create
quotations.
• To arrive at final agreed price a quotation may loop through the
worksheet several times.
NO Is the NAV/T as per YES Worksheet forwarded to
guidelines? TL for approval/consent
Worksheet data input by YES
Prints the worksheet with Is the price inline with
CO based on guidelines in
factor the market trend?
Baan
NO
Revised guidelnes
NO
YES Is NAV/T as per plan/
previous orders?
18

19. Worksheet preparation – Key Pain areas
• Work sheet was not user friendly
• Limited search facility to identify existing Item
Code.
– Only 3 product characteristics could be searched.
– Commercial assistant may have to inspect the
contents of each item in detail to identify correct item
code to quote against.
– Wrong item code sometimes selected.
– New code created simply because correct code to be
used could not be found.
19

20. Worksheet preparation – Key Pain areas
• A lot of manual adjustment needed to reach target price.
• Amending quotation took the same time as creating a new
quotation.
ERP
Commercial
Worksheet Commercial Clerk
Clerk loads Prices not Final Quotation prpared
defaults to exports ERP
items on to ERP approved
Ducab list Worksheet to Excel
Worksheet
price
Commercial Clerk
uses guidelines to
establish prices for
Commercial Commercial Clerk prints copy
Offering of ERP worksheet and gets
Prices approved
approval from required
authority.
Commercial Clerk
uses excel to
calculate line / Commercial Clerk manually
order discount adjusts line / order discounts in
factors needed to ERP Worksheet to set prices
set prices for to Commercial offering
Commercial
Offering
20

21. Worksheet preparation – Key Pain areas
• Poor retention of quotation history.
– Could only retrieve hard copies of previous quotations
for comparison
– Inconsistency in pricing.
• No system generated customer / region factor in
prices.
• Poor “what if” facility.
– Quotations had to be exported to excel in order to
analyse the effect of discounts on margins
• No systematic way of charging for small order
quantity.
21

22. Worksheet preparation – Key Pain areas
• Currency conversions were manual.
• Product descriptions were free flow text.
• Terms and conditions were in free flow text.
• Final Quotations had to be printed and then
scanned into pdf format to send to customers.
• Customers disliked the landscape format of
quotations.
• Some customers required the quotation in excel
format which had to be created manually.
22

23. Interface between Commercial and
Design Departments.
• No formal protocol for information exchange.
– Mostly done by e-mail.
– Frequent needs to clarify information.
– Repeated requests for the same information.
• Departments working to different sets of
priorities.
• No common database of information.
• Need for Commercial to request information
even of a trivial nature.
• Hence high workload on Technical Department
resulting in delays.
23

24. Ducab order intake for 2009
• 80% of sales revenue came from 13% of orders
• 80% of man hours spent on 20% of order revenue..
Pareto Analysis of order intake
90%
80%
70%
% of Sales Revenue
60%
50%
40%
30%
20%
10%
0%
13% of Sales orders 87% of Sales orders
20% of man hours 80% of man hours
Order intake
24

25. Ducab order intake for 2009
• To add value to activities in the Commercial / Technical Departments more
time needed to be directed towards the Commercial offering for large high
value business.
• However, system constraints meant that the time spent on a quotation was
independent of the potential value of the quotation.
• Commercial staff had no free time to put extra effort into high value
quotations.
• This was not good business sense since higher value quotations carried
higher risk and therefore needed more scrutiny.
25

26. Initial Conclusion
• Minor modifications to the existing mode of operation would not yield the desired
benefit.
• Business Process Re-Engineering was needed.
• Change needed to be:
– Fundamental
• Why to we do it this way?
• Why not differently?
– Radical
• Starting from scratch. Not modifying.
– Dramatic.
• Looking for an “order of Magnitude” change.
• A Quantum leap.
– Processes.
• Work on processes not activities.
26

27. Questions
1. Could the desired change be achieved within the limits of the existing ERP system?
2. Could the desired change be achieved outside of the existing ERP system?
The first question was of a practical nature. To what extent could the existing ERP
system be modified to accommodate the desired change?
The second question was of a cultural nature. The ERP system was considered to
be sacred. To depart from the ERP system would be a hard sell inside the
company.
It would also be courageous to take such a bold step.
It would certainly qualify as Fundamental, Radical and Dramatic.
27

28. IMPROVE
28

29. Two Phase Approach
• Phase 1:
– Improve the Commercial activity.
• Phase 2
– Improve the Commercial / Technical Department interface.
29

30. Phase 1 Functional Design Specification
• The first step towards answering the burning questions
• The Commercial team put together a functional design specification for what was
needed from the Process.
• We tried to do this with out basing it around the limitations of the existing ERP
system.
• A table of definitions was created for essential characteristics along with a list of
inputs / outputs to the Process of creating a Quotation.
30

31. Work sheet input data
Input variable Data Source
Customer ERP Data base
Customer Code ERP Data base
Sales Rep ERP Data base
Sales Manager ERP Data base
Commercial Officer ERP Data base
Line of business ERP Data base
Area ERP Data base
Project ERP Data Base
Quotation no / Version ERP Data Base
31

32. Work sheet inputs
Input variable Data Source
Date Automatic
Cu price in Sales ERP Data base
LME Copper price ERP Data base
Cu price in Cost ERP Data base
Cu Premium ERP Data base
Order discount Manual Adjustment
32

33. Work sheet inputs
Input variable Data Source
Item code ERP Data base
Item Description ERP Data base
TPL ERP Data base
Quoted Price QP TPL adjusted by LME
Line factor Variable used to set Price
Net Quoted price / unit NQP QP adjusted by Line factor to give
target NAV.
Target NAV ERP Data base
Quantity Manual input
Line price NQP x Quantity
33

34. Work sheet inputs
Input variable Data Source
Net Cost Standard cost adjusted by LME and
material escalation factor.
Actual NAV Net price – Net Cost
Actual NAV % (Net price- Net cost) /NP
Actual NAV / Cu t (Net price- Net cost) / Cu t
Cu variation factor ERP Data base
Cu t Cu variation factor / 3.675 x
Quantity.
Min order Quantity MOQ ERP Data base
Surcharge for short length Based on Tgt NAV and MOQ
34

35. Quotation specific data required
for retreval
Quotation no / Version
Customer Code Date
Sales Rep Cu price in Sales
Sales Manager LME
Commercial Officer Cu price in Cost
Line of business Cu Premium
Area Order discount
Project
35

36. Line specific data required for
retreval
Quotation no / Version
Serial no
Item Code
Line factor
Quantity
36

37. Modeling the Solution
• Combining the functional design and
the input / output data requirements
a solution was modelled using Excel.
• Data base tables were exported from
the ERP system to Excel Files.
• Over a period of 4 weeks the model
was reviewed regularly by the
Commercial team and enhanced.
37

38. Solution Criterea Preference
Criteria Weighting Comments
Time needed for 30% Time was of high importance as lack of solution
implementation was damaging the company.
Needed to be 20% Wanted to be clear that Process Improvement is
achieved with existing not dependant on increasing resource
human resource
High probability of 15% Wanted to avoid a solution that still left the
success system constrained to any extent.
User friendly 15% Needed complete buy in from the end users.
No external help 15% An in house solution would generate much better
required. ownership of the process and incur less cost.
Low cost 5% Cost is always important, but should not over ride
the need for a satisfactory solution.
38

39. Building the final
Solution
• Ducab’s IT department were called in
to see the demonstration model.
• Two options were possible:
• Re-create the model in the
existing ERP system
• Or Write a program to replicate
the functionality of the model.
39

40. Choosing the Option
Option Points in Points against
favour
All data bases used to create The ERP system was very
Modify existing Quotations existed in the ERP dated.
ERP system system and were accessed by
many other processes.
The desired functionality
required by the model could
The Company policy was to not be achieved without major
migrate all activities to the upgrade or re-writing of the
ERP system. ERP system.
Upgrade or re-writing would
be costly and take months to
achieve.
Outside consultants would be
needed.
Customisation of the existing
ERP would make it
incompatible with later
versions of the ERP.
40

41. Choosing the Option
Option Points in Points against
favour
Solution could be reached Would exist outside of the
Write new that 100% met the ERP system.
program to requirements.
Data would still need to be
No external help was needed. maintained in the ERP
replicate the system.
Could be achieved in weeks.
function of the Very low cost solution.
model Would not require
customisation of the existing
ERP system.
41

42. Decided to write new
program
• Only practical solution.
• Quotations could exist outside of the
ERP as they had no impact on the
accounts until an order is taken.
• New program would access the
existing ERP data base for costs /
BOM.
42

43. CONTROL
43

44. Trial period
• New software written inside 4 weeks.
• Trialled in parallel with existing
system from Mid August to end
September 2010. Modifications made
• Used 100% for all quotations from 1st
October 2010.
• Minor issues only incurred.
44

45. Training program
• To facilitate the implementation an
interactive training program was
developed for users.
45

46. Key improvements
• All functionality needed to create
quotation existed in the new program.
• No need for any off line working in
Excel.
• 75% reduction in the time needed to
prepare a quotation.
• 95% reduction in the time needed to
revise a quotation.
46

47. Key improvements
• Comprehensive search facility to find
correct product code for quotation.
• Library of Standard descriptions and
Terms and Conditions created which
could be directly imported into the
quotations.
• Direct export of quotation to pdf file in
user friendly portrait format.
• Direct export of quotation to Excel file
to meet customer preference.
47

48. Key improvements
• Good storage and retrieval facility to
search previous quotations
48

49. Goal Achieved
Quotation performance Oct 2010 to Jun 2011
% of quotations sent within target time.
95%
90%
% within target time
85%
80%
75%
70%
October November December January February March April May June
Month
49

50. Phase 2 Commercial / Technical Interface
• Three actions identified
1. Create a database of frequently asked questions and Technical Data Sheets to reduce the
need for repeated referrals from Commercial to Technical for the same information.
2. Establish a protocol for information exchange between the two departments
3. Automate the system for providing Estimated Material Weights for quotations for new
products.
50

51. Data base of information
• A data base of Technical Data sheets was created and indexed such that it could
be easily accessed by the Commercial Department.
• Over a period of time a data base of answers to frequently asked questions was
created and made available to the Commercial office.
Golden Rule:
Before you try to improve an interface, first eliminate
where ever possible the need for the interface
51

52. Establish protocol for information
exchange
• Formal structure set up with on-line forms for communication between the
Commercial and Technical Departments.
• Forms included such fields as responsibility allocated to task and dead line for
information required.
• Forms also monitored progress status.
• The use of free flow e-mails as a form of communication almost eliminated..
52

53. Automation of creation of estimated
material weights.
• Existing cable design system created comprehensive BOM required to make a
product.
• It was time consuming and created a lot of extra detail not needed for quotation
purposes.
• A simpler, faster system was needed to create designs with the bare minimum of
information needed for quotations.
• In house program created by a Design Engineer and an IT expert.
• Time required to produce Estimated Material Weights reduced by >50% (still under
evaluation)
53

54. Reduction in queries from Commercial
Department to Technical.
Requests for Information
From Commercial to Design
210
195
180
165 Average 2010
150
135
120
No. of requests
105
90
75
60
45
30
15
0
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec-
11 11 11 11 11 11 11 11 11 11 11 11
54

55. Summary.
• Large scale improvements were achieved by making fundamental
improvements to the Business processes.
• No increases were made to the resource in any area.
• Zero costs were incurred in contracting in outside help.
• All improvements including software writing were achieved using in house
talent.
• By using resources already employed by the company the project was
achieved at zero cost.
55

56. Recognition.
• One Employee from the Project Team was selected as Employee of the
month.
56

57. Key lessons learned.
• To achieve Business Process Improvement you have to be prepared to break
the rules.
• Most constraints exist in our minds only.
• Make the Process fit the needs of the Company. Don’t try to fit the Process
into a constraining system.
• Make life easy for people.
• Look for a large scale improvement.
• Do not start with the objective of cost reduction. An improved process will be
more efficient and will improve Return On Capital Employed.
• In house talent exists and is far more cost effective than outside consultancy.
57

58. Final Comment.
Within 3 months of implementing the new
Quotation system the Company came to
the conclusion that the existing ERP
system no longer met the business needs.
An upgrade of the ERP system was
rejected in favour of a brand new
implementation.
Ducab is approaching the new
implementation with opened minds.
58